Sense and Nonsense as Usual from Brooks

http://www.nytimes.com/2011/02/11/opinion/11brooks.html

I'm always impressed by the ability of Brooks to make several good points to establish credibility and then to reach very bad conclusions. I have got into the habit of reading his last paragraph first to see what point he really wants to make before reading the whole article.

He is absolutely correct when he argues that the discretionary budget is small relative to parts of the budget that are mandated by law. Therefore, many of the proposed cuts in discretionary spending may be harmful to our future and they really wont make a big dent in the growth in federal spending since it is being driven by growth in entitlement spending. After that he goes downhill.

One problem with his analysis of discretionary spending is that he does not mention that our defense budget is equal to that of the total spending on defense of the 15 countries with the largest defense budgets below the US. This part of the budget is untouchable because the majority of Americans believe, along with our elected officials, that we need a strong defense but most are not aware of how much we spend on defense relative to the rest of the world.

Brooks makes the common error in his analysis of entitlement spending of lumping social security with health care spending. Social security has been running at a surplus for years Tax receipts have been greater than benefit payouts and the government has been borrowing from this surplus to fund other spending. In the future tax receipts will fall below benefit payments but this can be fixed with minor changes to its tax or benefit structure. Spending on healthcare is another story. It has been the fastest growing part of the budget and it needs to be fixed. Growth in spending has been driven by price inflation. Prices charged for healthcare services and products have inflated at around 7% annually. There is no way of controlling the growth in healthcare spending without dealing with price inflation. We spend twice as much per capita on healthcare as that of the next country below us in per capita spending and we are the only rich country in the world without universal healthcare. Our system is inefficient and costly but we have been unable to do much to fix it because of politics. Lumping the healthcare mess with social security is a mistake because it opens the door for the GOP to privatize it and turn the program over to Wall Street for plundering.

Brooks argues the we need to get federal spending under control in order to deal with our large budget deficits. This plays right into the hands of the deficit hawks who focus on spending cuts and ignore the revenue side of the equation. We have budget deficits when tax receipts don't cover government spending. Our current budget deficits are primarily due to the fall in tax receipts as a result of recession and a slow recovery. They are also a result of extending the Bush tax cuts that primarily benefit the wealthiest Americans.

In summary after reading the Brooks op-ed one is left with the impression that everything would be fine if we cut spending on entitlements which includes social security but says nothing about rampant price inflation and inefficiency in our healthcare system. Moreover, there is little real discussion of the contribution of tax policy and a slow growing economy to our deficit problem.